Last week, the Commerce Commision accused energy networks company Vector of abusing its market power, and threatened to impose price controls. Vector has responded by declaring a capital strike and suspending all infrastructure investment - in effect, threatening long-term energy supply to Auckland unless they are allowed to continue to violate the law and screw monopoly profits from those unfortunate enough to be their customers.
These tactics are more reminiscent of a band of rapacious gangsters than a commerical enterprise, and should serve as a pointed reminder of why we should never allow infrastructure monopolies to be privatised.
9 comments:
The tactics borrow heavily from Telstra and their dummy spitting over regulation by the Australian authorities. Telecom will be watching closely...
Posted by Anonymous : 8/15/2006 12:08:00 PM
This comment has been removed by a blog administrator. Posted by Rich : 8/15/2006 01:33:00 PM
Part of me agrees with you. The other part thinks of the annual dividend we Aucklanders get from vector and cheers the buggers on!
Posted by Rich : 8/15/2006 01:34:00 PM
I'm going to post an example of how Vector rips off it's industrial customers with just one example I know of in the Wellington area. Vector charge a major public utility a number between $10,000 and $20,000 EVERY time they turn a particular facility on, whether it is for one month or one minute.
The utility still pays all the other costs,r the line charge, the installed transformer costs and actual energy consumed....but on top of this they charge this outrageous sum....simply because they are a monopoly in the area concerned, and they can. There is no other valid reason given.
As a result a several million dollar facility has remained completely unused even though there would be good reasons to use it if not for the rapacious behaviour of this privately owned pack of thieves.
The details have been deliberately kept vague to avoid identification....but the gist of it conveys an accurate picture.
Posted by Anonymous : 8/15/2006 06:11:00 PM
Surely this latest robber baron tactic by Vector should be enough to have these monopolies smashed for once and all.
Why do we persist with this folly foisted on us by Max Bradford when Minister?
It is not just the Lines monopoly and Transpower monopoly that is a criminal imposition on all of New Zealand the Wholesale/Retail model is also seriously flawed and most users have little or no real choice of supply on a competitive basis.This is especially the case for large users as noted in the example of a Wellington utility.
For instance, how many people know that Empower is a division of Contact? the only company that has substantial private ownership and much of it overseas.
The other names are mainly SOE's or in other words fragments of the previous Govt depts trying to make out that they are Marketing Gurus.
In a true Market the buyer has a choice of several suppliers and no border barriers . We have no choices and the Pacific Ocean is a very effective border.
The Transpower proposed 400kva line to Auckland on high towers could well be redesigned to be
an HVDC line following the highway one route underground to Auckland without any upset to landowners.
New Zealand was a pioneer in using this technology to connect the Benmore output to the North Island.
I have not seen or heard a mention of this possibilty in the general media.
There are hundreds of similar links world wide the nearest betwen Queensland and NSW.The modern systems have other important technical advantages over HVAC transmission also.
Finally the dividend that Aucklanders ( ex AEPB customers only) get each year is a pittance compared to the money that finds its way into all the executives in the various companies,the raft of specialist consultants that have sprung up since the changes and the normous amounts of money that companies spend on Advertising,Promotions,Market Research,Loyalty Discounts and the like.
All this to sell the same energy to the same customers at steadily increasing prices.
Posted by Anonymous : 8/15/2006 09:05:00 PM
Surely this latest robber baron tactic by Vector should be enough to have these monopolies smashed for once and all.
Why do we persist with this folly foisted on us by Max Bradford when Minister?
It is not just the Lines monopoly and Transpower monopoly that is a criminal imposition on all of New Zealand the Wholesale/Retail model is also seriously flawed and most users have little or no real choice of supply on a competitive basis.This is especially the case for large users as noted in the example of a Wellington utility.
For instance, how many people know that Empower is a division of Contact? the only company that has substantial private ownership and much of it overseas.
The other names are mainly SOE's or in other words fragments of the previous Govt depts trying to make out that they are Marketing Gurus.
In a true Market the buyer has a choice of several suppliers and no border barriers . We have no choices and the Pacific Ocean is a very effective border.
The Transpower proposed 400kva line to Auckland on high towers could well be redesigned to be
an HVDC line following the highway one route underground to Auckland without any upset to landowners.
New Zealand was a pioneer in using this technology to connect the Benmore output to the North Island.
I have not seen or heard a mention of this possibilty in the general media.
There are hundreds of similar links world wide the nearest betwen Queensland and NSW.The modern systems have other important technical advantages over HVAC transmission also.
Finally the dividend that Aucklanders ( ex AEPB customers only) get each year is a pittance compared to the money that finds its way into all the executives in the various companies,the raft of specialist consultants that have sprung up since the changes and the normous amounts of money that companies spend on Advertising,Promotions,Market Research,Loyalty Discounts and the like.
All this to sell the same energy to the same customers at steadily increasing prices.
Bodmin
Posted by Anonymous : 8/15/2006 09:09:00 PM
For the Com. Com. to impose price controls (especially unprofitable ones) and insist on infrastructure investment for a public company is outrageous. If i was a share holder I would be well pissed off. Vector is a public company and obliged to maximise shareholder return, if this means infrastructure investment is uneconomical... then thats just tough. If the govt didnt want this situation they shouldnt have privatised.
Posted by Anonymous : 8/18/2006 11:50:00 AM
For the Com. Com. to impose price controls (especially unprofitable ones) and insist on infrastructure investment for a public company is outrageous. If i was a share holder I would be well pissed off.
Vector is obliged to make decisions which maximise shareholder return, if that means not investing in uneconomical development then so be it.
You cant expect shareholders to take a hit for the public good, they wont do it
Posted by Anonymous : 8/18/2006 11:54:00 AM
Anon: indeed, they shouldn't have privatised. But that was kindof my point.
Brian Rudman has an interesting perspective in the Herald today, in which he basically blames it all on the empire-building of the Vector board, and their decision to take over United Networks. Its rather a good point.
Posted by Idiot/Savant : 8/18/2006 12:20:00 PM
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